Greater Taipei building taxes to soar in July

TAIPEI, Taiwan -- Owners of buildings constructed in Greater Taipei after July 1 will have to pay much higher house taxes than those levied on older ones, according to the latest changes to property taxation schemes.

Taipei and New Taipei have revised the basis for calculating the value of buildings whose construction is completed after July 1, the former increasing by 136 percent and the latter by 100 percent.

Property taxes in Taiwan are divided into two categories: one for the land and another for the buildings. The new scheme applies to the building tax, which is based on a government-assessed value, rather than market value.

Accordingly, the owner of an average 40-ping (1,440-square feet) apartment in a 15-story building completed in Taipei after July 1 may have to pay an annual building tax of NT$26,000, the Commercial Times newspaper estimated.

A pre-July 1, 2014 unit of the same size will incur a building tax of only NT$11,000, the paper said.

The increases in building taxes for newly constructed luxury apartments in upscale areas will be even higher, it added.

The new schemes will not affect the 2.48 million units that already existed before July 1, but they mark another step by the authorities to curb speculative transactions.

The present system has been in use for 30 years without revision, and has been unable to realistically reflect the market value of properties. Such underestimation has allowed speculators to hold on to their properties with very low taxes.

Meanwhile, the central bank disclosed that home mortgage loans totaled NT$5.725 trillion as of May, while outstanding loans for construction projects stood at NT$1.553 trillion. Both sums hit their respective highest levels in 10 years.

The home mortgage loan figure in May represents an increase of NT$24.437 billion compared to April's, and the sum of construction loans in May rose by NT$9.97 billion compared to the previous month, the central bank said.

The bank said the sum of home mortgage loans is expected to continue rising as ownerships of more newly completed units are transferred from developers to home buyers who will have to take out mortgages.

Construction loans have also been on the rise this year as developers rush to begin their projects ahead of building code changes to be implemented next year, the central bank explained. The changes will reduce the total floor space allowed on construction land.